Chevron Corp <CVX.N> on Tuesday said it would keep spending in check and return billions to shareholders over the next five years, with Chief Executive Mike Wirth making the case that his company is the oil major best able to produce oil and generate profits at the lowest cost.
The number two U.S. oil producer laid out its plan to weather what is turning into one of the most challenging markets in years, as coronavirus concerns dent short-term demand and environmental and investor pressures cloud longer-term outlook for the industry.
Chevron will stick to the previously announced capital spending plan of $19 billion to $22 billion annually through 2024, setting it apart from chief U.S. rival Exxon Mobil, which is spending heavily to boost production.
Oil prices are down 20% this year and natural gas prices have fallen to their lowest since the 1990s. Industry returns have lagged the broader market for a decade, souring investors.
“Even with price volatility, we have the capability to deliver leading dividend growth and sustain our buyback program well into the future,” Wirth said in a statement shortly before the company hosts investors and analysts in New York on Tuesday.
Chevron plans to distribute as much as $80 billion in cash to shareholders over the next five years, Wirth added.
The top U.S. shale field will continue to drive Chevron’s oil growth, and the company expects “sustained production over 1 million barrels per day in the Permian through 2040 at relatively flat activity levels,” said Jay Johnson, executive vice president. Chevron reached 514,000 barrels per day of output in the field at the end of 2019, up 36% in a year.
The company also said it plans to stick to its previously announced spending plans of $19 billion to $22 billion annually through 2024.
Reuters reported on Monday that the company is offering buyout to reduce its U.S. oil exploration and production workforce as it moves to cut costs in the face of sharply lower oil and gas prices.